The U.S. Securities and Exchange Commission (SEC) has settled charges against Zachary Coburn, the founder of EtherDelta, a digital “token” trading platform.

The crypto trading platform allowed users to trade Ethereum-based tokens without registering accounts or entrusting their funds to an exchange-controlled wallet. Trading was managed by a smart contract, though the exchange relied on off-chain infrastructure maintained by its operator.

According to the SEC charges, the EtherDelta platform illegally allowed users to trade tokens that the SEC considers to be securities under federal law, making it an unregistered securities exchange.

This is the SEC’s first enforcement action based on findings that such a platform operated as an unregistered national securities exchange.

EtherDelta is an online platform for secondary market trading of ERC20 tokens, a type of blockchain-based token commonly issued in Initial Coin Offerings (ICOs). The order found that Coburn caused EtherDelta to operate as an unregistered national securities exchange.

Without admitting or denying the findings, Coburn consented to the order and agreed to pay $300,000 in disgorgement plus $13,000 in prejudgment interest and a $75,000 penalty.

The settlement is announced as US authorities step up their efforts to put an end to cryptocurrency fraud.

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